The two main financial statements you need for business valuation are the balance sheet and the income statement. Business valuation is ultimately an economic analysis exercise. The company financial information provides key inputs into the process. In order to do a proper job of valuing a small business, you should have three to five years of historical income statements and balance sheets available.

Determining the value of your business uses these three approaches:
Comparison to recent sales of similar businesses,
Earning power and risk assessment
The company?s assets.

It may be surprising that valuation results are influenced by your need for business valuation, but business value isn’t absolute. It is a process of measuring the worth of the business, which depends on two key elements: